Berry Announces Third Quarter 2023 Results

•	GAAP: Net sales of $3.2 billion; Operating income of $267 million; Earnings per share of $1.18

•	Non-GAAP: Operating EBITDA of $522 million; Adjusted earnings per share of $1.90

Consolidated Overview

The net sales decline is primarily attributed to decreased selling prices of $250 million due to the pass-through of lower resin costs and a 7% volume decline.  The volume decline is primarily attributed to softer demand in our consumer and industrial markets, including destocking, partially offset by strong growth in foodservice.

The operating income decrease is primarily attributed to a $44 million unfavorable impact from the volume decline, a $30 million increase in business integration costs and a $10 million expense related to a third-party warehouse fire.

Consumer Packaging - International

The net sales decline is primarily attributed to a 5% volume decline due to softer consumer and industrial market demand in Europe, including destocking.

The operating income decrease is primarily attributed to a $14 million unfavorable impact from increased business integration costs and a $10 million unfavorable impact from the volume decline. These items are partially offset by a favorable impact from price cost spread.

Consumer Packaging - North America

The net sales decline is primarily attributed to decreased selling prices of $105 million and a 4% volume decline primarily attributed to softer industrial and consumer market demand, including destocking partially offset by strong growth in foodservice.

The operating income decrease is primarily attributed to a $8 million unfavorable impact from the volume decline and a $6 million unfavorable impact from increased business integration costs.

Health, Hygiene, & Specialties

The net sales decline is primarily attributed to decreased selling prices of $83 million and a 7% volume decline primarily attributed to weaker demand in specialty markets, such as filtration and building and construction, including destocking, partially offset by growth in disinfectant wipes.

The operating income decrease is primarily attributed to a $20 million unfavorable impact from price cost spread, a $9 million unfavorable impact from increased business integration costs, and an unfavorable impact from the volume decline.

Engineered Materials

The net sales decline is primarily attributed to an 11% volume decline attributed to destocking and weakness in European industrial markets and decreased selling prices of $77 million.

The operating income decrease is primarily attributed to a $18 million unfavorable impact from the volume decline, partially offset by a favorable impact from price cost spread.

Berry generates significant cash flow and is committed to returning capital to shareholders. This annual cash flow provides substantial capacity to simultaneously reinvest in the business for organic growth, pursue bolt-on acquisitions, pay down debt and return cash to shareholders through a compelling dividend as well as regular share repurchases.  The Company expects to return over $700 million through share repurchases and dividends in fiscal 2023, subject to market conditions, available cash on hand and cash needs, overall financial condition, and other factors considered relevant by our Board of Directors.

Dividend and Share Repurchases

As previously announced, Berry’s Board of Directors declared a quarterly cash dividend of $0.25 per share payable on September 15, 2023 to stockholders of record as of September 1, 2023.  During the third quarter, Berry repurchased 1.4 million shares (or approximately 1.2% of shares outstanding) for $83 million, leaving over $625 million authorized for share repurchases at the end of the third fiscal quarter.  Through the first three quarters of fiscal 2023, we have repurchased 6.9 million shares (or approximately 5.6% of shares outstanding) for $416 million.  Berry may repurchase shares through the open market, privately negotiated transactions or other programs, subject to market conditions.  The Company continues to expect to repurchase at least $600 million of stock in fiscal 2023, subject to market conditions, available cash on hand and cash needs, overall financial condition, and other factors considered relevant by our Board of Directors.

(based on information available as of August 9, 2023)

•	Adjusted earnings per share of $7.30

•	Cash flow from operations of $1.45 million; free cash flow of $800 million

•	Anticipate returning at least $700 million of capital to shareholders through share repurchases and dividends

The Company will host a conference call today, August 9, 2023, at 10 a.m. U.S. Eastern Time to discuss our third fiscal quarter 2023 results.  This call will be webcast live on Berry’s website at https://ir.berryglobal.com/financials.  A new, simplified event registration and access provides two ways to access the call.  A replay of the webcast will be available via the same link on our website approximately two hours after the completion of the call.

By Telephone

Participants may register for the call here now or any time up to and during the time of the call, and will immediately receive the dial-in number and a unique pin to access the call. While you may register at any time up to and during the time of the call, you are encouraged to join the call 10 minutes prior to the start of the event.

Via the Internet

At Berry Global Group, Inc. (NYSE:BERY), we create packaging and engineered products that we believe make life better for people and the planet.  We do this every day by leveraging our unmatched global capabilities, sustainability leadership, and deep innovation expertise to serve customers of all sizes around the world.  Harnessing the strength in our diversity and industry leading talent of 46,000 global employees across more than 250 locations, we partner with customers to develop, design, and manufacture innovative products with an eye toward the circular economy.  For more information, visit our website, or connect with us on LinkedIn or Twitter.

This press release includes non-GAAP financial measures such as operating EBITDA, Adjusted EBITDA, Adjusted net income, Adjusted earnings per share, free cash flow, and comparable basis net sales, adjusted EPS and operating EBITDA.  A reconciliation of these non-GAAP financial measures to comparable measures determined in accordance with accounting principles generally accepted in the United States of America (GAAP) is set forth at the end of this press release.  Information reconciling forward-looking operating EBITDA is not provided because such information is not available without unreasonable effort due to the high variability, complexity, and low visibility with respect to certain items, including debt refinancing activity or other non-comparable items.  These items are uncertain, depend on various factors, and could be material to our results computed in accordance with U.S. GAAP.

Statements in this release that are not historical, including statements relating to the expected future performance of the Company, are considered “forward looking” within the meaning of the federal securities laws and are presented pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  You can identify forward-looking statements because they contain words such as “believes,” “expects,” “may,” “will,” “should,” “would,” “could,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” “projects,” “outlook,” “anticipates” or “looking forward,” or similar expressions that relate to our strategy, plans, intentions, or expectations.  All statements we make relating to our estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates, and financial results or to our expectations regarding future industry trends are forward-looking statements.  In addition, we, through our senior management, from time to time make forward-looking public statements concerning our expected future operations and performance and other developments.

Our actual results may differ materially from those that we expected due to a variety of factors, including without limitation: (1) risks associated with our substantial indebtedness and debt service; (2) changes in prices and availability of resin and other raw materials and our ability to pass on changes in raw material prices to our customers on a timely basis; (3) risks related to acquisitions or divestitures and integration of acquired businesses and their operations, and realization of anticipated cost savings and synergies; (4) risks related to international business, including transactional and translational foreign currency exchange rate risk and the risks of compliance with applicable export controls, sanctions, anti-corruption laws and regulations; (5) increases in the cost of compliance with laws and regulations, including environmental, safety, and climate change laws and regulations; (6) labor issues, including the potential labor shortages, shutdowns or strikes, or the failure to renew effective bargaining agreements; (7) risks related to disruptions in the overall global economy, persistent inflation, supply chain disruptions, and the financial markets that may adversely impact our business, including as a result of the Russia-Ukraine conflict; (8) risk of catastrophic loss of one of our key manufacturing facilities, natural disasters, and other unplanned business interruptions; (9) risks related to weather-related events and longer-term climate change patterns; (10) risks related to the failure of, inadequacy of, or attacks on our information technology systems and infrastructure; (11) risks that our restructuring programs may entail greater implementation costs or result in lower cost savings than anticipated; (12) risks related to future write-offs of substantial goodwill; (13) risks of competition, including foreign competition, in our existing and future markets; (14) risks related to market conditions associated with our share repurchase program; (15) risks related to market disruptions and increased market volatility as a result of Russia’s invasion of Ukraine; and (16) the other factors and uncertainties discussed in the section titled “Risk Factors” in our Annual Report on Form 10-K and subsequent filings with the Securities and Exchange Commission.  We caution you that the foregoing list of important factors may not contain all of the material factors that are important to you. New factors may emerge from time to time, and it is not possible for us to predict new factors, nor can we assess the potential effect of any new factors on us. Accordingly, readers should not place undue reliance on those statements.  All forward-looking statements are based upon information available to us on the date hereof.  All forward-looking statements are made only as of the date hereof and we undertake no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

Berry Global Group, Inc.

Consolidated Statements of Income (Unaudited)

Condensed Consolidated Balance Sheets (Unaudited)

Condensed Consolidated Statements of Cash Flows (Unaudited)

Segment and Supplemental Comparable Basis Information (Unaudited)

(1)	The prior year comparable basis change excludes the impacts of foreign currency, acquisitions, and divestitures.  Further details related to non-GAAP measures and reconciliations can be found under our “Non-GAAP Financial Measures and Estimates” section or in reconciliation tables in this release.

Reconciliation of Non-GAAP Measures

Reconciliation of adjusted earnings before interest, tax, depreciation and amortization (EBITDA), Net income, and earnings per share (EPS)

(in millions of USD, except per share data amounts)

We define “free cash flow” as cash flow from operating activities, less net additions to property, plant, and equipment.  We believe free cash flow is useful to an investor in evaluating our liquidity because free cash flow and similar measures are widely used by investors, securities analysts, and other interested parties in our industry to measure a company’s liquidity.  We also believe free cash flow is useful to an investor in evaluating our liquidity as it can assist in assessing a company’s ability to fund its growth through its generation of cash.

Adjusted EBITDA is used by our lenders for debt covenant compliance purposes.  We also use Adjusted EBITDA, Operating EBITDA, and comparable basis measures, among other measures, to evaluate management performance and in determining performance-based compensation.  Operating EBITDA is a measure widely used by investors, securities analysts, and other interested parties in our industry to measure a company’s performance.  We also believe EBITDA and Adjusted net income are useful to an investor in evaluating our performance without regard to revenue and expense recognition, which can vary depending upon accounting methods. (BERY-F)

Company Contact Information

Dustin Stilwell

VP, Investor Relations

+1 (812) 306 2964

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